GSK Adds Around $5B in a Month: Here's How to Play the Stock

GSK's stock rose 6.4% over the past month, adding nearly $5 billion in market value, primarily driven by the strong performance of its Specialty Medicines unit, which saw 16% sales growth in H1 2025 from oncology and long-acting HIV drugs, and a promising pipeline with recent approvals and upcoming launches. While facing headwinds from an 11% decline in U.S. vaccine sales in H1 2025 and generic competition, the company projects over 7% sales growth and over 11% core operating profit CAGR through 2026, with Specialty Medicines expected to comprise over 50% of total revenues by 2031, positioning it at an attractive valuation relative to the industry.

Analysis

GSK's stock has demonstrated significant strength, rising 6.4% in the past month and 21.2% year-to-date, driven by a successful strategic pivot towards its Specialty Medicines division. This unit's impressive 16% sales growth in the first half of 2025, fueled by new oncology and long-acting HIV drugs, is effectively offsetting material headwinds in the Vaccines segment. The company projects Specialty Medicines will grow from approximately 40% of current sales to over 50% by 2031, underpinning a long-term outlook of over 7% sales CAGR through 2026. This growth narrative is further supported by a robust pipeline, evidenced by recent U.S. approvals for Penmenvy, Blujepa, and a new indication for Nucala, with multiple additional FDA decisions anticipated in 2025. However, notable risks persist, primarily the sharp decline in U.S. vaccine sales, which fell 11% in H1 2025 due to a 56% drop in Shingrix sales and an 18% fall in Arexvy sales following revised vaccination guidelines. Other challenges include the upcoming dolutegravir patent expiration in 2028-2029 and an expected £400-500 million negative sales impact from the Inflation Reduction Act in 2025. Despite these pressures, the stock trades at an attractive forward P/E ratio of 8.58, a significant discount to both the industry average of 14.78 and its own five-year mean.

Key Decisions for Investors

• Given the strong growth trajectory of the Specialty Medicines unit and a valuation discount to peers, investors may consider the stock a core holding, as the company appears to be successfully navigating its transition despite vaccine-related headwinds.
• Investors should closely monitor the performance of the U.S. Vaccines business, as a failure to stabilize sales of key products like Shingrix and Arexvy could undermine the company's overall growth guidance and pressure the stock.
• Pay close attention to near-term pipeline catalysts, as positive FDA decisions in 2025 for candidates like the Blenrep combination and depemokimab are critical for de-risking future revenue streams ahead of the 2028-2029 patent cliff.